Learn how to pay for big expenses from the May 16 InvestMe event
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The key to achieving financial freedom does not just depend on how much you earn or how much you have, but your ability to pay for all your expenses for as long as you live.
The ability to forecast and plan for all your future needs and expenses is probably the most important step in financial planning if you wish to have a comfortable lifestyle after you stop working.
Many people make the mistake of just investing to achieve a single sum, such as $1 million, thinking that having such a substantial amount would enable them to enjoy financial freedom for life.
But they forget such savings would not last if they have the tendency of overspending and living beyond their means.
Take, for instance, someone who needs to spend an average of $5,000 a month.
A simple calculation will reveal that if you have such regular expenses monthly, you would need to incur at least $60,000 a year.
This means that even if you have $1 million when you stop working at 65, the savings can barely last you until the age of 85.
The reality is that your money will run out faster than you think because you probably fail to take into account unexpected big expenses such as home renovations, replacement of big household items as well as premiums for medical insurance that will go up significantly with age.
This is the reason why we have planned a series of six financial literacy sessions under The Straits Times InvestMe campaign so that readers can learn practical tips on how they can have better money sense.
It is not difficult to plan for enough money that can last you a lifetime if you know the safe and secure options that are available.
This is the primary focus of the first InvestMe event – Retire With More Money – which will be held at 10.30am on May 16 at SPH Media’s auditorium at News Centre, Toa Payoh North.
I will be kicking off the financial literacy journey with this session, which shares the same title of my latest book, as it highlights the importance of planning for a non-stop and decent retirement income so that you can pay for all your bills even after you stop working.
Just consider the following four points.
Future medical costs. The key to having private hospitalisation insurance is not about choosing the cheapest policy but whether you have done enough to plan for such expenses. For instance, if you have planned for the highest monthly payout of CPF Life, just saving $1,000 of this sum means you will have an extra $12,000 to pay for such policies.
High retirement income from CPF. It is not fiction but a fact that you can rely on CPF alone for a decent retirement payout. Just ask the 71-year-old retiree who is now receiving $4,600 a month from CPF. Many people mistakenly think that you need to be rich to get such a payout but the reality is you can achieve this if you know how to start early.
Do not fall for promises of easy money. Achieving financial freedom is not always about making the most profitable investments but how to avoid silly and costly mistakes that will cost you dearly. Their plights are now featured in the InvestMe microsite.
Understand your properties. Many people think that having a second property is the key to retirement planning, but they do not understand the rules relating to their investment. Just ask the for not filing their rental incomes properly.
To sign up for the course, you need to subscribe to Existing subscribers can also sign up as this renews their existing plan without incurring additional charges.
Why do you need to do so? This ensures that you will continue to be enlightened by our weekly stories because financial literacy does not end with our courses.
After all, it is always better to learn how to retire with more money than to find out that you do not even have enough in your old age.
Check out The Straits Times InvestMe microsite to sign up for the first financial literacy event – Retire With More Money – by Invest Editor Tan Ooi Boon.
